STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MECHANICAL CONTRACTORS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2916

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on November 16, 1994, in Milton, Florida.

APPEARANCES

For Petitioner: Harold D. Callaway, Jr., Esquire

Qualified Representative Callaway & Associates Post Office Box 2323

Gulf Shores, Alabama 36524

For Respondent: Robert L. Powell, Sr., Esquire

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700 STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern whether the Petitioner, Mechanical Contractors, Inc. (Petitioner or MCI), is entitled to recover its original claim in the amount of $38,138.17 and its addendum to its claim in the amount of $61,590.15 "for Owner caused delays, increased equipment costs, and noncooperation from and hindrance by the Owner". Additional issues concern whether the original and the addendum to the claim were filed timely and whether the claims were submitted for improper or frivolous purposes as proscribed by Section 120.57(1)(b)5., Florida Statutes, such that the Respondent, Department of Health and Rehabilitative Services (Respondent or Department), is entitled to attorney's fees and costs related to this proceeding.

PRELIMINARY STATEMENT

On or about March 30, 1994, the Petitioner filed a claim in the amount of

$38,138.17, pursuant to the "Exclusive Claim Provision" of its contract with the Department, specifically Provision 8.4.2. The contract involved certain

renovations or modifications of the heating, ventilation, and air-conditioning system (HVAC) at the Department's West Florida Community Care Mental Health Facility in Milton, Florida. The claim, in essence, was for certain overhead profit and bonding costs which the contractor attributed to "Owner caused delays, increased equipment costs, and noncooperation from and hindrance by the Owner". The Respondent denied the claim and by notice dated May 25, 1994 referred the matter to the Division of Administrative Hearings and the undersigned Hearing Officer. Thereafter, on July 20, 1994, an addendum to the claim was filed by the Petitioner in the amount of $61,590.15. A Motion to Strike that addendum to claim was filed by the Respondent on October 7, 1994 and, at hearing, the Respondent moved ore tenus to strike the entire claim as untimely for being filed more than 21 days after the transaction or occurrence upon which it was based.

The Respondent also moved for costs and attorney's fees, pursuant to Section 120.57(1)(b)5., Florida Statutes, alleging that delay damages or extended overhead, if any, resulted from the Petitioner's own acts or omissions. Ruling on the motions was reserved until after the taking of evidence. They are addressed in this Recommended Order. The Respondent submitted an attorney's fees and costs "proposal" on December 12, 1994 and states that it faxed a copy of that document to the Petitioner and its qualified representative on December 13, 1994.

The cause came on for hearing as noticed. The Petitioner called two witnesses at hearing and offered five exhibits, four of which were received into evidence. The Respondent called three witnesses and offered 25 exhibits, 21 of which were admitted into evidence. The parties ordered a transcript of the proceeding and requested an extended briefing schedule for submission of Proposed Recommended Orders, containing proposed findings of fact and conclusions of law. The Respondent timely filed proposed findings of fact, and the Petitioner submitted its argument in letter form, but submitted no proposed findings of fact. The proposed findings of fact submitted are addressed in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein.

FINDINGS OF FACT

1. The Petitioner is a HVAC contractor primarily in the business of contracting with governmental entities for such work. The Respondent is an agency of the State of Florida which operates the West Florida Community Care Center in Milton, Florida, and is the owner who invited bids on the subject project and announced the award of the pertinent bid to MCI.

   
   

2. On January 15, 1993, MCI was notified by the Department that it had been awarded the contract for HVAC renovation at West Florida Community Care Center in Milton, Florida. The proposed contract was submitted to the Petitioner, who retained the contract for 45 days before executing it and returning it to the Respondent. Thus, although the Petitioner maintained at hearing that it expected to receive a notice to secure permits and to begin work in early February, 1993, MCI, rather, held the contract document until March 1, 1993 before signing it and returning it to the Department as a valid contract.

   
   

3. On March 4, 1993, the Department sent a "notice to secure permits" to the Petitioner. In reality, it was the Department's responsibility to obtain the relevant construction permits according to the terms of the contract between the parties. The Department was initially unaware that it was designated in the contract to obtain the permits. From March 4, 1993, there was a 21-day delay,

   caused by the Department, before it realized that it was required to obtain the construction permits. After that time period, it requested the Department of Management Services to complete its permit review and approval process which also took some time to accomplish. The period of time actually taken by the Department of Management Services to do its permit review and approval process was not delay caused by the Department, however. In any event, however, the contract time did not begin to run until the Notice to Proceed was issued from the Department to the Petitioner.

   
   

4. On April 28, 1993, MCI submitted its mechanical and electrical submittals or shop drawings for the project to the project engineer's employee or designee, Kenny Lewis. Mr. Lewis was responsible for receiving and reviewing the submittal drawings. The control system submittal drawings were not submitted at this time because, in Mr. Morgan's experience, these should not have been due until the mechanical and electrical submittals had been approved.

   
   

5. Some items contained in the submittal were approved and others were rejected. Mr. Lewis instructed Mr. Morgan, MCI's President, on or about May 14, 1993, as to which drawings or portions thereof were acceptable and which were rejected. He instructed Mr. Morgan that everything should be re-submitted in one binder, including the items that needed correction and the control system. The corrected submittals, including the control system, were submitted on or about June 2, 1993. Thereafter, Mr. Lewis had the submittals before him for approval until June 28, 1993, when they were approved. Therefore, most of the month of June 1993 involved a wait by the Petitioner for the Department's approval of its drawings of those aspects of the mechanical and electrical components of the project which were found to need correction during Mr. Lewis' first review.

   
   

6. Upon the Petitioner's showing of this amount of lag time in the approval of the submittals from June 2, 1993 to June 28, 1993, the Department did not demonstrate why such a period of time delaying the progress of the project was necessary. There is no doubt that some reasonable period of time for Mr. Lewis to approve the re-submittal drawings was necessary, but certainly no more than two weeks should have been required since the first drawings for the entire project were reviewed and variously approved or rejected by Mr. Lewis during the period of time between April 28, 1993 and May 14, 1993.

   Consequently, it is reasonable to infer that approximately two weeks of the period of time in June, 1993, while the re-submitted drawings were pending for Mr. Lewis' review, can be deemed "Owner caused delay".

   
   

7. In any event, the air-handlers portion of the submittal drawings was approved with the remainder of the submittals by Mr. Lewis on June 28, 1993. It developed immediately thereafter, however, that the manufacturer of those air handlers represented in those submittal drawings was found to be unable to deliver that equipment for some 12 to 14 weeks. In order to avoid this inordinate delay, Mr. Morgan re-submitted the air-handler portion of the shop drawings changing the brand and depiction of equipment to propose Trane air- handler equipment, which would take less time for delivery. The record does not reflect what date the re-submittal of the air-handler portion of the shop drawings was made by Mr. Morgan, calling for the Trane machinery, but Mr. Lewis approved the re-submittal for the Trane equipment on August 9, 1993.

   
   

8. The Petitioner claims that the manner in which Mr. Lewis handled the shop drawing submittals resulted in owner-caused delay, which is compensable using the so-called "Eichleay formula", derived from a relevant court decision and at issue in this proceeding. Mr. Lewis, however, can clearly not be faulted

   in the delay caused by the rejection of certain portions of the original submittals he considered to be unacceptable. No evidence was submitted to prove that his decision concerning certain portions of the original drawings submitted was improper. Further, the approximate two-week period of time during which Mr. Lewis reviewed the original submittals from April 28, 1993 to May 14, 1993 was not shown to be in excess of a reasonable time to perform his task under the circumstances.

   
   

9. It was not shown, however, that it should have been necessary to take from June 2, 1993 to June 28, 1993 to approve the re-submittal of the shop drawings, inasmuch as much of the work had already been approved by Mr. Lewis, and it certainly should not have taken longer than two weeks to approve the drawings in June, since much of the work represented thereon had already been approved in May, 1993. However, for the reasons delineated below, that owner- caused delay is not actionable in this proceeding. It is also true that a substantial delay occurred for, in essence, the entire month of July and first week of August, during the period of time that Mr. Morgan had to re-submit the air-handler portion of the shop drawings to reflect the change to Trane equipment, when the originally-proposed air-handler equipment could not be timely made available. That delay, however, was not shown to be the fault of either party to the contract.

   
   

10. The Petitioner finally submitted a written claim pursuant to the terms of the contract to the project engineer, H.M. Yonge, on or about March 30, 1994. The latest event which could possibly have given rise to a claim by the Petitioner for additional compensation based upon owner-caused delay, caused by failure to finally approve submittals on a timely basis, would have been August 9, 1993, when the final approval for the Trane equipment-related change was rendered by Mr. Lewis. The delay during July and the first week of August was not shown to be the fault of either party. The earliest date that the 21-day waiver period for making a claim, pursuant to the terms of the contract referenced below, could have began running, concerning owner-caused delay in approving plan submittals, would have been May 5, 1993 or May 10, 1993. That was the time when Mr. Morgan informed Mr. Lewis that re-submittal with corrections, and to include the control systems, would "delay the submittals if you make me wait on the controls, because we don't have them and it's going to be weeks before we do have them."

    
    

11. The claim for owner-caused delay with regard to either possible claim date or any other should have been made within 21 days of the point when the delay occurred or the contractor became aware of the delay. In the circumstances at bar, Mr. Morgan was surely aware, on both an immediate and ongoing basis, of these potential elements of owner-caused delay, such that the Petitioner has been unable to justify waiting until March 30, 1994 to submit such a claim. Had the claim been timely submitted in accordance with paragraph

    4.3.3 of the contract documents, the Respondent would have had some opportunity to attempt to cure the defect or otherwise mitigate any resulting damages to the contractor which might have been attributable to the owner. The failure to file a claim for any owner-caused delay perceived by the Petitioner in approving the plan submittals within 21 days of the event, even if it was the date of final plan approval, was prejudicial to the Department inasmuch as the Department was thus not aware of the claim such that it could have taken immediate steps to take corrective action or to mitigate any damages thus incurred by the contractor, the Petitioner herein.

    
    

12. The contract between the parties clearly contemplates the issuance by the Respondent of a Notice to Proceed. The Petitioner was not obligated to

    commence work until a Notice to Proceed was issued by the Department, and the contractual time period for performance of the contract by the Petitioner did not commence until the date of issuance of the Notice to Proceed. Instead of waiting for the Notice to Proceed, however, the Petitioner began work a few days prior to April 20, 1993 by demolition and removal of the existing air-handling units. The time for performance of the contract, however, did not begin to run until the Notice to Proceed was issued on May 24, 1993. The Petitioner commenced work before receipt of a Notice to Proceed because he wished to demolish and remove the original air handlers in hopes of getting the new air- conditioning system installed and operational prior to the hot season of the year in mid summer. This may have been a commendable reason for proceeding early on the work at hand, but it also represents poor planning on the Petitioner's part in that, with the delays which developed, some of which might have been reasonably foreseen, the new air-handling equipment did not become available until late summer at the earliest. In the meantime, because of the premature demolition of the existing air handlers, the building was left without air-conditioning for its occupants, mental health patients. Therefore, the Petitioner had to obtain and install temporary air-handling units to provide

    air-conditioning until the permanent system could be obtained from the manufacturer and installed. Better coordination between the Petitioner and the project engineer would seem to dictate that the existing air-handling system not be removed until shortly before the new air-handling equipment would be on site and ready to install in order to minimize the down time of the air-conditioning system of the facility, which was critical to the comfort of the patients and staff at the facility. Thus, any delay caused by the Petitioner's demolition of the existing air handlers and the work he performed prior to the Notice to Proceed was not shown to be attributable to the owner but, rather, to the Petitioner's voluntary commencement of the work on the contract prior to the contractually-provided commencement date. No owner-caused delay resulted in the necessity for the contractor to obtain the temporary air-conditioning or air- handling equipment. Thus, the contractor was not shown to be entitled to reimbursement from the owner, the Department, for that expense.

    
    

13. The Petitioner's claim also contains a request for $268.31 as payment for additional work performed but not required by the contract. The Petitioner attributes this sum to the installation of a "drop ceiling" to accommodate an over-sized fan located in the ceiling. There is no written request for authorization for this additional work from the Petitioner to the owner or the owner's engineer. No proof was presented to show that the use of an over-sized fan was the fault of the owner. In fact, Mr. Morgan testified that the fan mounted by the Petitioner was too large for the space above the ceiling. The evidence concerning this circumstance reveals that use of an excessively-sized fan in the initial installation should have been a problem foreseen by the Petitioner. It was not shown to be fault of the owner, and there is no evidence that the requisite, prior written authorization for the additional work involving installing the fan and the drop ceiling was obtained from the owner, as the contract requires.

    
    

14. The petitioner's claim letter of March 30, 1994 also requests a total of $951.36 for extra work related to "addition of chilled and hot water lines". Mr. Morgan testified that Mr. Hester, an employee and representative of the owner at the site, "wanted, and in fact, insisted that I install isolation valves at this point . . . so they could shut that off and isolate that air handle unit five . . . ." Mr. Morgan then offered to re-use some of the existing valves he had taken out as part of his demolition effort. The Petitioner did not show why the portion of the additional requested charge of

    $951.36 related to the installation of isolation valves to isolate air-handler

    unit no. 5 was really necessary in view of the fact that existing valves that had been taken out as part of the demolition work carried out at the start of the project, prior to issuance of the Notice to Proceed, were proposed to be used by Mr. Morgan for this purported additional work requested by Mr. Hester, the owner's representative on the site. It was not shown by the Petitioner that had the existing valves been left in place, they could not have been used for that portion of the work related to the requested additional $951.36 charge for additional work related to chilled and hot water lines concerning air-handler unit no. 5.

    
    

15. The claim letter also requests $388.31 related to purported additional work concerning "electric circuit to HVAC panels". The Respondent never provided a written authorization to the contractor for this work. The Respondent contends that the engineer required that MCI agree to provide a fully-functional system, which would not be possible without all necessary power wiring being installed, including the related circuitry concerning the panels in question. The Petitioner failed to establish that any additional work should be paid for by the Respondent related to the electric circuit to the HVAC panels because the Petitioner did not establish by preponderant evidence that such work should be deemed an addition to the scope of work and related price described in the original contract, nor that the claim was supported by a proper written request for authorization and corresponding approval, and/or change order, as required by the contract.

    
    

16. The Petitioner failed to file written proposals for the additional work it believed was required to the Respondent at the times it perceived the additional work to be necessary during the course of the project. It did, however, induce the Petitioner to agree to a change order giving a substantial extension of time for performance of the contract to the Petitioner. Timely- filed written proposals for the purported required additional work would have enabled the Respondent to have investigated and included its approval of any legitimate extra work in the change order. In fact, however, the Petitioner never actually completed the contract and failed to thus completely perform the change order. One reason for this might have been that the Trane Company from which the Petitioner was to obtain the air-handling equipment was owed $9,010.00 by the Petitioner. It appears from the evidence, particularly the testimony of Mr. Jenkins, that Trane was unwilling to fill the order for the air-handling equipment in spite of the Petitioner's attempts to obtain it because it had never been paid for the $9,010.00 back debts owed to Trane by MCI.

    
    

17. Pursuant to the terms of the contract (page 81), a contractor is required to submit an affidavit swearing that all costs incurred for equipment, materials, labor, and services against the project had been paid before being entitled to final payment. At the time the March 30, 1994 claim was filed, MCI had received $87,784.89 in payment for the work performed. The change order entered into by the parties raised the total scope of the work to $109,760.98. On or about March 30, 1994, the claim filing date, $30,000.00 was still owed to subcontractors and suppliers.

    
    

18. The contract between the parties recognizes remedies for the contractor "for delays in the progress of the work" or "for changes in the work". Specifically, Article 8.4.2, at page 66, provides that:

    
    

    [t]he Contractor's exclusive remedy for delays in performance of the contract caused by events

    beyond its control shall be a claim for equitable adjustment in the contract time; provided, however,

    inasmuch as the parties expressly agree that over- head costs incurred by the Contractor for delays in performing the Work cannot be determined with any degree of certainty, it is hereby agreed that in the event Contractor is delayed in the progress of the Work after Notice to Proceed to mobilize on a site and to proceed with construction for causes beyond its control and attributable only to acts

    or omissions of Owner, Contractor shall be entitled to compensation for overhead and profit costs either

    1. as a fixed percentage of the actual cost of the change in the Work if the delay results from a change in the Work, as calculated in Section G, Supplementary General Conditions, or (b) if the delay results from other than a change in the work, at an amount for each day of delay calculated by dividing an amount equal

       to percent of the original contract sum by the number of calendar days of the original contract time.

       
       

       In the event of a change in the Work, Contractor's claim for adjustments in the contract sum are limited exclusively to its actual costs for such changes plus fixed percentages for overhead, additional profit and bond costs, as specified in Section G.

       
       

       The foregoing remedies for delays and changes in the Work are to the exclusion of, and thus eliminate, the total cost concept (that is, computing Contract's additional costs for changes in Work or for the cost of a delay in the progress of the Work by comparing Contractor's total actual costs with its original estimate, see McDevitt & Street Company v. Department of General Services, State of Florida, 377 So.2d 191 (Fla. 1st DCA 1979)) as a method of determining Contractor's costs associated with a change in the Work or delay in the progress of the Work.

       
       

19. The parties also agreed, at page 10 of 13 of the contract, that the contractor shall have no right to compensation other than or in addition to that provided by the contract to satisfy any claim for costs, liabilities, or debts of any kind whatsoever resulting from acts or omissions attributable to the owner, unless the contractor has provided notice, as required by Article 8 and

    12 of the AIA General Conditions (incorporated in the contract) and unless the claim is delivered to the owner. Article 8.3.1 of the AIA General Conditions, at page 16-A201-1987, provides:

    
    

    If the Contractor is delayed at any time in progress

    of Work by an act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor employed by the Owner, or by changes

    ordered in the Work, or by labor disputes, fire, unusual delay in deliveries, unavoidable casualties or other causes beyond the Contractor's control, or by delay authorized by the Owner pending arbitration,

    or by other causes which the Architect determines may justify delay, then the Contract Time shall be extended by Change Order for such reasonable time as the Architect may order.

    
    

20. Article (paragraph) 8.3.2 provides that Claims relating to time shall be made in accordance with applicable provisions of Paragraph 4.3.

    
    

21. Article (paragraph) 4.3.3, Time Limit on Claims, provides:

    
    

    Claims by either party must be made within 21 days after occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later. An additional Claim made after the initial Claim has been implemented by Change Order will not be considered unless submitted in

    a timely manner.

    
    

22. Article (paragraph) 4.3.1, Definition, provides:

    
    

    A Claim is a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract. The term "Claim" also includes other disputes and matters in question between the Owner and the Contractor

    arising out of or relating to the Contract. Claims must be by written notice. The responsibility to substantiate Claims shall rest with the party making the Claim.

    
    

23. Article (paragraph) 4.3.7, Claims for Additional Cost, at page 12 A201-1987 of HRS Composite Exhibit 1, provides:

    
    

    If the Contractor wishes to make Claim for an increase in the Contract sum, written notice as provided herein shall be given before proceeding to execute the Work. Prior notice is not required

    for Claims relating to an emergency endangering life or property arising under Paragraph 10.3. If the Contractor believes additional costs are involved

    for reasons including but not limited to (1) a written interpretation from the Architect, (2) an order by

    the Owner to stop the Work where the Contractor was not at fault, (3) a written order for a minor change in the Work issued by the Architect, (4) failure of payment by the Owner, (5) termination of the Contract by the Owner, (6) Owner's suspension, or (7) other reasonable grounds, Claim shall be filed in accordance with the procedures established herein.

    
    

24. The Petitioner did not submit its original claim nor its addendum to its claim in a timely manner and with proper notice in accordance with these provisions referenced above. The parties have agreed, by the terms of their contract, that disputes concerning such claims are to be resolved exclusively in

    this administrative forum and in accordance with Chapter 60-4, Florida Administrative Code.

    
    

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding, pursuant to Section 120.57(1), Florida Statutes.

    
    

26. The preponderant evidence of record demonstrates that there was some owner-caused delay occasioned by the Department's failure to realize that it was required by the terms of the parties' contract to obtain the relevant construction-related permits. That owner-caused delay is not compensable under the above-referenced terms of the contract between the parties, however, because that occurred prior to May 24, 1993, the date of the Notice to Proceed. The terms of the contract state that the Notice to Proceed was the initiating event for the contractual time period to begin running. Thus, the Petitioner would not have been prejudiced by such delay.

    
    

27. Article 4.2.7 of the contract provides in pertinent part:

    
    

    4.2.7 The Architect [Engineer] will review and approve or take other appropriate action upon the Contractor's submittals such as Shop Drawings, Product Data and Samples, but only for the limited purpose of checking for conformance with information

    given and the design concept expressed in the Contract Documents. The Architect's action will be taken with such reasonable promptness as to cause no delays in the Work or in the activities of the Owner, Contractor or separate contractors, while allowing sufficient time in the Architect's professional judgment to permit adequate review. Review of such submittals

    is not conducted for the purpose of determining accuracy and completeness of other details such as dimensions and quantities, or for substantiating instructions for installation of performance of equipment or systems, all of which remain the responsibility of the Contractor as required by the Contract Documents. The Architect's review of the Contractor's submittals shall not relieve the Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12 . . . .

    
    

28. No owner-caused delay was demonstrated concerning the plan submittal review performed by the owner's designee, the engineer, Mr. Lewis, during May of 1993. That review, which was a review of the plan submittals "from scratch", took approximately two weeks. What really amounted to a supplemental plan review of the re-submitted plans, which had the Petitioner's corrections to deficiencies determined in the May, 1993 review by Mr. Lewis took almost a month, however. That review, as shown by the evidence, should have been less extensive and time consuming since re-review of the portions of the submittals already approved would have been unnecessary. Consequently, it is reasonably inferred from the totality of the evidence that a period of two weeks during the month of June, 1993 constituted owner-caused delay in relation to Mr. Lewis' review of the re-submittals of the plan drawings. The record, however, does not reflect at what point from June 28th forward through the month of July the

    Petitioner re-submitted his plan drawings reflecting the change to Trane air- handling equipment because of the problem of obtaining the equipment from the originally-proposed manufacturer. In any event, those plan re-submittals were approved on August 9, 1993 by Mr. Lewis. There is no showing that either party caused any inordinate delay in the approvals of the re-submittals related to the switch to Trane equipment. Thus, the Petitioner has not shown that any of that time period in July and August was related to owner-caused delay.

    
    

29. The Petitioner's decision to begin demolition and removal of the existing air-handling units prior to receipt of the Notice to Proceed and without coordinating that operation with the project engineer was a direct cause of the need for temporary air-conditioning to handle the heat gain during the summer months, while the project was still in progress. Had proper coordination taken place, the expense of temporary air-conditioning sought by the Petitioner herein could have been avoided. The request for payment for temporary air- conditioning in the original claim and in the addendum is without merit. While it is true that the contract provides that owner-caused delay was compensable to the contractor by way of overhead and profit, the contractor must bear the burden of proof of such owner-caused delay. The Petitioner has failed to prove such owner-caused delay caused the incurrment of the cost for temporary air- conditioning units. In fact, the 21-day delay caused by the owner (even though it was before the Notice to Proceed was issued) should have put the contractor on notice that he should refrain from removing the air-conditioning units and so coordinate the work schedule and mode with the project engineer as to allow the original air-conditioning system to remain operable until the end of the most intense period of summer heat.

    
    

30. In terms of engineer-caused delay, the Petitioner did prove an approximate two-week period of engineer-caused delay occurring in the month of June, 1993, as referenced in the above Findings of Fact. The engineer charged with approval of the plan submittals, under the facts of this case and the prevailing law, can be deemed to be the agent of the owner and, therefore, the engineer's delay is imputed to the owner. The above Findings of Fact reflect clearly, however, that, in terms of the relevant provisions of the parties' contract, that owner-caused delay is not actionable in this proceeding, because the claim for the compensation related to any such owner-caused delay was clearly not timely filed, but was months beyond any appropriate deadline for filing such a claim.

    
    

31. The claim for additional compensation of $268.31 for additional work involved in lowering the ceiling to accommodate an over-sized fan was not filed in accordance with the contract requirements either. The evidence shows that the claim was first raised in the March 30, 1994 claim letter nearly a year after the occurrence giving rise to the additional cost and clearly far beyond the contractually provided deadline for filing such claims. Moreover, it was not shown to be the Respondent's fault that an over-sized fan had originally been installed by MCI. Mr. Morgan of MCI never established why properly-sized fans, according to the plans could not have been installed nor which was more cost-effective, the removal of the over-sized fan and installation of a properly-sized fan, as opposed to leaving the over-sized fan in place and doing the additional ceiling work. Further, the contract provides that such additional charges for additional work must be noticed in writing to the owner. The $268.31 charge was not noticed in writing to the owner and could not, therefore, be a part of the change order. The requirement of pre-authorization for additional work is not placed in the contract to be ignored. When Mr. Morgan was contemplating how to alleviate the problem about the over-sized fan sticking out of the ceiling, the engineer's involvement might have been obtained

    to determine a less-costly manner of dealing with the discrepancy, if Mr. Morgan had merely brought the matter to the owner or the engineer's attention through a properly-filed written request for additional work. Then, he would have been entitled, assuming it was pre-authorized, to the $268.31 additional charge.

    Thus, the Petitioner failed to prove by a preponderance of the evidence that the claim for additional work related to lowering the ceiling is compensable under the contract, given the circumstances herein, even if the claim therefor had been timely filed, which it was not.

    
    

32. Similarly, no compensation is due MCI for replacement of the isolation valves connected with air-handler units 2 and 3 that were improperly demolished. MCI, as shown by the above Findings of Fact, improperly demolished the existing isolation valves that served to isolate the air-handling unit. No pre- authorization for destruction of the original valving was obtained, and Mr. Morgan merely explained that he believed this was something Mr. Hester (an owner's representative, but not the project engineer) wished him to do. Here, again, no timely claim was filed for this work. Thus, the claim for $951.35 for the hot and chilled water line-related work is not compensable.

    
    

33. The claim for $388.31 for additional work related to the electric circuit to HVAC panels is without merit for the reasons mentioned in the above Findings of Fact. The plans and contract call for a fully-functional system to be delivered by MCI. It cannot be a fully-functional system in accordance with the appropriate terms of the contract if all wiring necessary for the system to operate is not installed. Proper and careful coordination and review of shop drawings would have disclosed the discrepancy concerning the HVAC panels and electrical circuitry to the Petitioner. The omission of this wiring should have been noticed by the project engineer if the plans for it had been properly submitted together in a single binder with other plan submittals, as requested by the project engineer. Proper and careful coordination and review of shop drawings should have disclosed the discrepancy to the Petitioner if he had then filed a timely written request for authorization to install the wiring-related equipment not shown in the shop drawings. If such did not appear in the shop drawings, the control system subcontractor or the Petitioner itself is at fault. Thus, the Petitioner has not shown that the alleged additional work for this wiring is, indeed, compensable under the contract and, in any event, the claim seeking payment therefor is not timely for the reasons noted above.

    
    

34. Concerning the Respondent's motion and proposal for payment of costs and attorney's fees to the Respondent, it is determined that the Respondent has not demonstrated that the amount sought for attorney's fees and costs is reasonable under the circumstances. All legal and other services involving the Respondent's participation in this litigation was done by in-house agency personnel. Consequently, it has not been demonstrated that the hourly rate sought nor the other elements of the attorney's fee request and related cost request is reasonable under the circumstances of this case. The proposal is supported only by self-serving affidavits and documents generated by in-house personnel of the agency Respondent.

    
    

35. Further, although the Petitioner is at fault for many of the problems with the subject contract and project which culminated in this litigation and although its legal position in this litigation has proven to be incorrect, it was not established that this is a frivolous or harassing action. Although its legal position in this proceeding is incorrect, MCI expressed a willingness to complete the contract, but had a good-faith belief in its arguments made in this proceeding in support of its purported entitlement to payment for the additional work at issue. It has not been proven to the satisfaction of the Hearing

Officer that the claim, however mistaken as a matter of law, was filed for frivolous or harassing reasons. Consequently, the motion for attorney's fees and costs, made pursuant to Section 120.57(1)(b)5., Florida Statutes, is denied.

RECOMMENDATION

Based on the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is

RECOMMENDED that a Final Order be entered by the Department of Health and Rehabilitative Services denying the Petitioner's claim and the addendum to its claim in its entirety.

DONE AND ENTERED this 31st day of March, 1995, in Tallahassee, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of April, 1995.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-2916

Petitioner's Proposed Findings of Fact None submitted.

Respondent's Proposed Findings of Fact

1-44. Accepted, to the extent they are not inconsistent with the findings of fact made by the Hearing Officer. To the extent that they are so inconsistent, they are deemed to be not supported by the preponderant evidence of record, or subordinate to the Hearing Officer's findings of fact on the same subject matter, or as unnecessary. In such circumstance, they are rejected.

COPIES FURNISHED:

Harold D. Callaway, Jr., Esquire Qualified Representative Callaway & Associates

Post Office Box 2323

Gulf Shores, Alabama 36524

Robert L. Powell, Sr., Esquire Agency Clerk

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Kimberly J. Tucker, Esquire General Counsel

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the Final Order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

MECHANICAL CONTRACTORS, INC.,

Petitioner,

vs. CASE NO. 94-2916

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES,

Respondent.

/

FINAL ORDER

This cause came on before me for the purpose of issuing a final agency order. The Hearing Officer assigned by the Division of Administrative Hearings entered his Recommended Order on March 31, 1995, and the Recommended Order was filed with the Clerk of the Division of Administrative Hearings on April 4, 1995. A copy of the Recommended Order is attached hereto and incorporated herein.

RULINGS ON EXCEPTIONS

The Petitioner filed exceptions on April 25, 1995, to the Hearing Officer's Findings of Fact contained in paragraphs 12, 13, 14, 15, 16, and 17 of the Recommended Order, and Conclusions of Law in paragraphs 29, 31, and 32 of the Recommended Order, and stated that a complete transcript of the hearing has been ordered and will be referenced upon receipt. No further material has been furnished to the agency by the Petitioner referencing the transcript.

Section 120.57(1)(b)(10) of the Florida Statutes provides that an agency may alter the findings of fact submitted by the hearing officer only upon a review of the entire record and a determination that either the finding complained of is unsupported by competent substantial evidence, or that the fairness of the proceedings was in some way impaired. Since the mere statement of an exception, without more, will not suffice to carry the burden of showing lack of competent substantial evidence, Petitioner has the burden of demonstrating the fault, if any, with the findings to which exception is taken. Failure to demonstrate that the exceptions filed are well founded must result in a denial of those exceptions. I find that the Petitioner has failed to sustain its burden of demonstrating error and, therefore, deny those exceptions numbered

1 through 6.

The Agency is not similarly bound with regard to the Petitioner's exceptions taken to the hearing officer's conclusions of law. Upon review, however, I find that exceptions 7, 8, and 9 must also be denied. No legal authority was cited in the exceptions, and no explanation was provided. In the absence of either of these, Petitioner has failed to sustain its burden of demonstrating error. Exceptions 7, 8, and 9 must, therefore, also be denied.

The Respondent filed exceptions on April 13, 1995, to the Hearing Officer's Conclusions of Law in paragraphs 30 and 34 of the Recommended Order. The Respondent's exception to the Hearing Officer's Conclusion of Law in paragraph

30 is granted as to the statement by the Hearing Officer that the "engineer charged with approval of the plan submittals, under the facts of this case and the prevailing law, can be deemed to be the agent of the owner and, therefore, the engineer's delay is imputed to the owner." The exception is denied as to any other language in paragraph 30. Respondent's exception to the Conclusion of Law in paragraph 34 is granted, based on the argument presented in the Respondent's written exceptions, and the case cited in the Notice of Supplemental Authority filed by the Respondent on April 14, 1995. See Blum v. Stenson, 465 US 886, 79 L Ed 2d 891, 104 S Ct 1541.

FINDINGS OF FACT

The Department hereby adopts and incorporates by reference the findings of fact set forth in the Recommended Order.

CONCLUSIONS OF LAW

The Department grants the respondent's exception to the language in paragraph 30 as described in the "RULINGS ON EXCEPTIONS" in this order, and the respondent's exception to paragraph 34 of this order. The Department hereby adopts and incorporates by reference all other conclusions of law set forth in the recommended order.

Based upon the foregoing, it is

ADJUDGED, that the Petitioner's claim and the addendum to its claim are denied in their entirety.

DONE and ORDERED at Tallahassee, Leon County, Florida, this 12th day of June, 1995.

H. James Towey, Secretary Department of Health and

Rehabilitative Services

by Lowell Clary

Deputy Secretary for Administration

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO A JUDICIAL REVIEW WHICH SHALL BE INSTITUTED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF HRS, AND A SECOND COPY ALONG WITH FILING FEE AS PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. REVIEW PROCEEDINGS SHALL BE CONDUCTED IN ACCORDANCE WITH THE FLORIDA APPELLATE RULES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

COPIES FURNISHED:

Thomas Grady Reed, III Thomas Grady Reed, III, P.A.

107 North Palafox Street Post Office Box 13247

Pensacola, Florida 32591-3247

Robert L. Powell, Sr. Assistant General Counsel Department of HRS Building E, Suite 200 1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

P. Michael Ruff Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

John S. Slye

Acting Agency Clerk Deputy General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard Building E, Room 200

Tallahassee, Florida 32399-0700

(904)488-2381

CERTIFICATE

I hereby certify that a true copy of the foregoing FINAL ORDER has been furnished to the above named persons by U.S. Mail this 14th day of June, 1995.

John S. Slye

Acting Agency Clerk

Docket for Case No: 94-002916

Orders for Case No: 94-002916